Moneycontrol
Sep 13, 2017 04:39 PM IST | Source: Moneycontrol.com

Hold Oil India; target of Rs 325: Sharekhan

Sharekhan is bullish on Oil India has recommended hold rating on the stock with a target price of Rs 325 in its research report dated September 07 2017.

 
 
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Sharekhan's research report on Oil India

Oil India Limited’s (OIL) domestic  1P reserves base for oil and gas at 29mmt and  77mmtoe (as on 31st March 2017), respectively,  provides production visibility of around nine  years for oil and ~26 years for gas at FY2017  production rate. In our view, weak oil reserve profile is a cause of concern in case OIL is unable to convert its 2P oil reserves of 79mmt to 1P reserves in the coming years. Moreover,  the 2P reserve mix in favour of gas (accounts for  61% of overall 2P reserves of 203mtoe) is also unfavourable as development of gas reserves  would be difficult in the weak domestic gas  price environment (current gas price of D2.48/ mmbtu).

Outlook

We maintain our Hold rating on OIL, given the muted earnings outlook (weak oil/gas realisation and production) and  lower RoE of 7% over FY2018E-FY2019E.

For all recommendations report, click here

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